Updated at 3.30pm with PN statement

The decision to call a snap election for June 3 is unlikely to impact Malta's fiscal setting, ratings agency Fitch has said. 

"We do not believe that Prime Minister Joseph Muscat's decision to call a snap election for 3 June, one year before his term was due to end, will result in a major change in fiscal setting," the agency said. 

Fitch said that the one per cent budget surplus Malta had managed in 2016 confirmed that the country's debt-to-GDP ratio was on a downward trajectory, with Malta beating the agency's predictions thanks to rising revenues  (up 4.5 per cent) and declining spending (down 1.4 per cent). 

The rating agency said both Dr Muscat's Labour Party as well as Simon Busuttil's Nationalist Party "share a broad commitment to fiscal responsibility," noting that the PN's most recent pre-budget document had proposed expansionary fiscal measures but also reforms intended to contain public spending. 

READ: Fitch upgrades Malta's outlook to 'positive'

Fitch also noted that the 2014 Fiscal Responsibility Act introduced by the government had enacted EU fiscal rules, established an independent fiscal council and made it possible for Malta to publish medium-term fiscal strategies as well as building up contingency reserves.

It noted that while the public sector wage bill and expenditure on goods and services had climbed rapidly between 2013 and 2015, the proportion of GDP spent on social benefits had declined by almost one percentage point over that period. 

While Malta's debt-to-GDP ratio, which stands at slightly lower than 60 per cent, remains somewhat higher than that of other 'A' rated countries, Fitch said that everything pointed to the country continuing to bring the ratio down over the coming forecast periods.  

Malta's economic growth rate was also set to continue outpacing similarly rated peers, it added.

Fitch analysts noted that the government had taken steps to insure against the risk of unexpected growth shock and long-term spending pressures caused by an ageing population by giving itself some "fiscal headroom" and passing various pension reforms. Contingent liabilities had declined and were set to fall further to an estimated 9.7 per cent of GDP once a guarantee to Electrogas for the contruction of a new power station expired at the end of this year. 

'Another economic medal' - government

In a statement welcoming Fitch's findings, the government said that analysts had underscored Malta's fiscal progress and highlighted the country's positive economic trajectory. 

Analysts' findings, the government said, discredited Opposition attempts to paint the budget surplus as a fraud. 

Only corruption allegations and scandals holding economy back - PN

In another statement, the PN noted that in its report, Fitch referred to the PN's most recent pre-budget noting it “contained proposals for expansionary fiscal measures… coupled with reforms to contain public spending” and concluded that both main political parties shared a broad commitment to fiscal responsibility.

This, the PN said, contradicted recent claims that a new PN government would stall the economic progress. The only factor that was holding the economy back and putting jobs at risk was the uncertainty caused by corruption allegations and scandals involving Joseph Muscat and his closest aides.

The PN noted that recent revelations of kickbacks and serious regulatory failings were putting further strains on Malta’s reputation and consequently the economy.